Calculating EAR. First National Bank charges 12.6 percent compounded monthly on its business loans. First United Bank charges 12.8 percent compounded semiannually. As a potential borrower, which bank would you go to for a new loan?© BrainMass Inc. brainmass.com September 24, 2022, 6:56 pm ad1c9bdddf
We need to calculate the Equivalent Annual Rate. Let us assume we borrow $100, then the compound interest formula for First National Bank ...
The solution explains how to calculate the EAR with different compounding frequency